Sunday, August 14, 2011

Down the same slippery slope

News you probably won't read in the U.S. except as a blip in the Wall Street Journal: "France, Belgium, Italy, and Spain banned short selling certain financial stocks."
What this means is that the stock markets in these countries is crashing and they are making it illegal to go "short" on a stock (betting against it) so that you can make money on the way down. We tried this once in the U.S. It didn't help. It is political gamesmanship to try to put the blame on wealthy stock investors for economic woes instead of the government for printing fiat currency and borrowing forever.

What is happening in Europe is a foreshadow of what will happen here. It is time now to get out of debt, build up an emergency fund, and develop alternative forms of income. It needs to be a priority. Government isn't going to solve your problems. Apart from a miracle, the government will go bankrupt and bring in a new Depression. It isn't a matter of IF but WHEN. And I REALLY do hope I'm wrong. But mathematically, our course seems certain. The good news is that you don't have to participate if you are diligent, take initiative, get creative, and get prepared. Get out of the mind-numbing business-as-usual "everything is going to be OK" mentality and get busy doing things to protect your family's future.

With such dire consequences on the way, what does our fearless leader, Comrade Hussein Obama want to do?

He tells people last week to call their Representatives and Senators because THEY are the problem. He has no responsibility in this. He is in the same sinking boat with us. He feels our pain. He inherited a triple-A credit rating (and a big deficit) from Bush, but now he has lost the credit rating for the first time in American history and he has put the deficit on steroids, but he isn't responsible. He, like us, is a victim of the evil Congress. {No, Mr. Obama, we aren't buying it. You have deliberately set out to destroy our Constitution and our American way of life. So far, it appears you are successful in your Marxist agenda.}

He is already calling for more tax-the-rich strategy. That sounds good to a lot of us middle class folks. But he keeps redefining rich lower and lower until a lot of barely-get-by middle class start feeling the pinch. And when you tax the rich, they quit starting business and buying stuff that provides the jobs for the rest of us. EVERY TIME in American history that we have lowered taxes, the REVENUE INCREASES. EVERY TIME we RAISE taxes, REVENUE DECREASES. Not a theory -- historical fact. So if Obama wants the government to have more money, he should lower taxes. But he refuses to do this because he is trying to destroy the economy rather than help it. (Yes, I do believe his actions are intentional and not the result of stupidity as many think.)

How well does the tax-the-rich strategy work? Well, take this one example.

In 1990 the U.S. passed a 10% tax on yachts, luxury airplanes, jewelry, furs, and expensive cars. Supposedly, this would only penalize the rich but not the poor. It was designed to make the rich pay their fare share (in spite of the fac they already pay 95% of all tax revenue in this country -- whcih hardly sounds fair). Above all, the government predicted they would raise $5 million dollars in tax revenue without hurting the working man. (Yes, back then we got excited about millions. Twenty-one years later, millions are chump change, and billions are barely noticeable. We are into trillions and talking about quadrillions.)

"Within eight months, the largest U.S. yacht company, Viking Yachts, closed one of its two plants and laid off more than 1,100 of its 1,400-member workforce. Within 12 months, one-third of all yacht builders in the U.S. ceased production. The industry lost 7,600 jobs in the first year. Before the tax was finally repealed, 25,000 workers lost their jobs.

"The U.S. went from exporting yachts to importing them. Viking Yachts shrank to just 68 employees. Congress estimated the tax would generate $5 million in revenue the first year. Reality didn't read the estimate… The Treasury lost $24 million in tax revenue because all the yacht makers either closed up or left the U.S. Congress repealed the tax in 1993." (Source, The Growth Stock Wire, 8/13/2011 edition)

When Franklin Delano Roosevelt raised taxes in the Great Depression, the Depression deepened, and more people found themselves out of work.

So this reminds me of my favorite Dave Ramsey quote. He has many famous sayings, but I don't hear him repeat this one too often. But it is the one thing he says that applies most directly to this situation (and to my own past monetary idiocy): "When you do stupid, you reap desperate."Listen to Dave. Quit doing stupid and then tell your officials you expect the same from them.